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Is Amdocs Limited (DOX) Going to Burn These Hedge Funds?

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We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Amdocs Limited (NYSE:DOX) based on that data.

Amdocs Limited (NYSE:DOX) was in 24 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 32. DOX investors should be aware of a decrease in activity from the world's largest hedge funds of late. There were 29 hedge funds in our database with DOX positions at the end of the second quarter. Our calculations also showed that DOX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to take a peek at the new hedge fund action surrounding Amdocs Limited (NYSE:DOX).

Do Hedge Funds Think DOX Is A Good Stock To Buy Now?

At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in DOX a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is DOX A Good Stock To Buy?
Is DOX A Good Stock To Buy?

Among these funds, Pzena Investment Management held the most valuable stake in Amdocs Limited (NYSE:DOX), which was worth $401 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $115.1 million worth of shares. Arrowstreet Capital, Ariel Investments, and Alyeska Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Amdocs Limited (NYSE:DOX), around 1.59% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, earmarking 0.85 percent of its 13F equity portfolio to DOX.

Seeing as Amdocs Limited (NYSE:DOX) has faced falling interest from the smart money, we can see that there is a sect of hedgies who sold off their full holdings last quarter. It's worth mentioning that John Hurley's Cavalry Asset Management said goodbye to the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $17.9 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $1.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Amdocs Limited (NYSE:DOX) but similarly valued. We will take a look at NiSource Inc. (NYSE:NI), TFI International Inc. (NYSE:TFII), The Middleby Corporation (NASDAQ:MIDD), Altice USA, Inc. (NYSE:ATUS), CAE, Inc. (NYSE:CAE), China Southern Airlines Co Ltd (NYSE:ZNH), and Newell Brands Inc. (NYSE:NWL). All of these stocks' market caps are similar to DOX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NI,24,435539,-12 TFII,23,270343,10 MIDD,29,567959,-6 ATUS,59,1167928,15 CAE,7,83687,-3 ZNH,3,8197,1 NWL,26,1635531,1 Average,24.4,595598,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $596 million. That figure was $824 million in DOX's case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. Amdocs Limited (NYSE:DOX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DOX is 41.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately DOX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DOX investors were disappointed as the stock returned -5.5% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.